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Papua New Guinea acquires majority stake in Barrick-Zijin gold mine

 


MELBOURNE (Reuters) -Barrick Gold Corp has reached an agreement that gives the government of Papua New Guinea a controlling stake in the Porgera gold mine as part of plans to restart operations, the company said on Friday.

The deal will set a benchmark for other resource projects in the region, Prime Minister James Marape said in a statement, and will help shape the terms of new developments by companies like Australian gold miner Newcrest Mining.

Porgera was closed for a year after a dispute over benefit-sharing terms between the operator, landowners and the government, but the new framework pact paves the way for resumption of operations despite having failed given no deadline.

We intend to partner with all major stakeholders to make Porgera a long-lived, world-class gold mine, Barrick CEO Mark Bristow said in a statement.

The deal places the Porgera ownership in a new joint venture 51% owned by PNG stakeholders and the remainder by Barrick Niugini Limited (BNL), Barrick added.

BNL, jointly owned by Barrick and Chinas Zijin Mining, will continue to operate the mine. The parties will now work on final terms before a restart.

Barrick and Zijin have agreed to halve their holdings by 47.5% each previously, with the remaining 5% going to Papua New Guineas Mineral Resources Enga.

The agreement establishes a 53:47 split between PNG and BNL stakeholders in terms of economic benefits generated over the life of the mine, with BNL providing the capital to restart.

Part of the capital increase will be allocated to a large group of landowners in the Porgera region. Papua New Guinea will retain the right to acquire the remaining 49% of the BNL mine at fair market value after 10 years.

The announcement is an important step in the government’s effort to build strong frameworks in the resource sector that will compare future considerations for similar projects, Marape said in a statement.

Major resource developments include the Newcrest Minings Wafi Golpu project.

Other benefits cited by Marape include the ability for landowners to increase their equity beyond 15%, with Barrick paying for the additional 10% free equity, as well as an additional 1% to 3% in payments. royalties to landowners, compared to 2%.

Until 2019, the economic split was around 25% for PNG stakeholders with equity and taxes, while the new agreement will see this shift to around 53% in favor of PNG stakeholders throughout. mine life.

Marape said the government was able to collect taxes in advance, with a 30% corporate tax rate for the project.

The Porgera Joint Venture is an open pit and underground gold mine located in Enga Province, approximately 600 km (373 miles) northwest of the capital, Port Moresby.

Porgera produced nearly 600,000 ounces of gold in 2019 before going into service and maintenance.

Reporting by Melanie Burton, Sonali Paul and Tom Westbrook; Editing by Clarence Fernandez

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